Unlike stocks, there is no inherent reason why the value of a given currency, measured against the value of another given currency, may continue over time to rise. It can fall just as easily as it can rise. Moreover, reasons for its rise or fall are often highly politicised - politicans may allow their currency to fall for populist reasons which have little to do with logic or good government.
Adding to the uncertainty, totally unpredictable events such as war or natural disasters can affect the currency in unpredictable ways : you can't insure a currency against such factors, other than with the futures contract itself.
You would think that futures traders would steer clear of speculating in currencies, yet George Soros' cornering of the Pound is probably history's best known futures event.
Despite all the uncertainties associated with currency speculation, there are times when it can be a successful bet. With the benefit of hindsight, it is now clear that the Pound was overvalued and that the British government did not possess the means to defend it. Similarly, continued dollar weakness seems most probable at the time of writing (December 2004).
But remember : what seems a blinding certainty can easily be reversed by a change in sentiment. Imagine, for example, how the dollar's prospects would improve should elections be successfully held in Iraq, leading to the withdrawing of US troops, while at home new jobs continued to be created. Then imagine what this would do to the dollar's corollary, gold.
Commodities suffer from similar uncertainties and unpredictabilities, but over the last century commodity values in real US$ have generally trended lower as technology has lowered the cost of bringing them to market. But this long-term trend is overridden in the short-term (read : 10 years?) by such factors as inflation, climate, and politics.
Personally I feel that currencies and commodities are usually best left to genuine hedgers rather than speculators. An exception might be gold at this point in time, given the current indebtedness of the US economy.
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